The firm's thesis focuses on a rare founder type: a technical expert who also deeply understands how new technologies shift human behavior. This avoids the common pitfall of building technology in search of a problem, leading to products with innate market pull.
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The ideal founder archetype starts with deep technical expertise and product sense. They then develop exceptional business and commercial acumen over time, a rarer and more powerful combination than a non-technical founder learning the product.
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Technically-minded founders often believe superior technology is the ultimate measure of success. The critical metamorphosis is realizing the market only rewards a great business model, measured by revenue and margins, not technical elegance. Appreciating go-to-market is essential.
In a crowded market, the most critical question for a founder is not "what's the idea?" but "why am I so lucky to have this insight?" You must identify your unique advantage—your "alpha"—that allows you to see something others don't. Without this, you're just another smart person trying things.
Instead of searching for a market to serve, founders should solve a problem they personally experience. This "bottom-up" approach guarantees product-market fit for at least one person—the founder—providing a solid foundation to build upon and avoiding the common failure of abstract, top-down market analysis.
A core investment framework is to distinguish between 'pull' companies, where the market organically and virally demands the product, and 'push' companies that have to force their solution onto the market. The former indicates stronger product-market fit and a higher potential for efficient, scalable growth.
In a fast-moving category like AI coding, platform features are fleeting. The more durable factor is the founding team's vision and ability to execute. Users should follow the founders of these companies, as choosing a tool is ultimately a long-term bet on a person's leadership and trajectory.
When evaluating revolutionary ideas, traditional Total Addressable Market (TAM) analysis is useless. VCs should instead bet on founders with a "world-bending vision" capable of inducing a new market, not just capturing an existing one. Have the humility to admit you can't predict market size and instead back the visionary founder.
Periods of intense technological disruption, like the current AI wave, destabilize established hierarchies and biases. This creates a unique opportunity for founders from non-traditional backgrounds who may be more resilient and can identify market needs overlooked by incumbents.
Venture capital should focus on what a founder does exceptionally well, rather than penalizing them for past failures or weaknesses. Ben Horowitz uses the Adam Neumann example to illustrate their principle: judge people by their spectacular talents (like building the WeWork brand) and help them manage their flaws, which is a more effective strategy than seeking perfectly flawless individuals.
